Sad Toy Story
The Federal Trade Commission earlier this week filed a complaint against the now bankrupt online "good toy" retailer
Toysmart.com Inc., seeking injunctive and declaratory
relief to prevent the sale of confidential, personal customer information
collected on the company's Web site in violation of its own privacy policy.
The complaint alleges that Waltham, Mass.-based Toysmart.com violated
Section 5 of the FTC Act by misrepresenting to consumers that personal
information would never be shared with third parties, and then disclosing,
selling, or offering that information for sale.
Through its Web site, Toysmart.com collected detailed personal information
about its visitors, including name, address, billing information, shopping
preferences and family profiles with the names and birthdates of children.
Since September 1999, Toysmart.com has posted a privacy policy which states
that information collected from customers will never be shared with third
parties.
Toysmart.com announced on May 22 that it was closing its operations and
selling its assets, which would include the private information. The FTC
learned about the possible violation of the privacy policy from
TRUSTe, a nonprofit privacy seal organization that had
licensed Toysmart.com to display its seal. FTC staff investigated this
information and discovered that Toysmart.com was offering its customer list
for sale in violation of its own privacy policy.
Meanwhile, Walt Disney Co., Toysmart.com's majority owner
has said that it has offered to purchase the company's customer list to
ensure consumers' privacy. In a prepared statement, Disney said that despite
the fact it is not involved in the lawsuit, it is working with the FTC to
ensure the list stays confidential.
"If the bankruptcy court ... allows us to purchase the list, we will do so,
and retire the list,'' Disney said. "If we are not allowed to purchase the
list, we will urge the court, as the FTC has, to permit a sale only to a
purchaser of all the assets of Toysmart.com who will maintain the
confidentiality of the information contained in the list.''
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